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HomeMy WebLinkAboutR33- Economic Development CITY OF SAN BERNARDINO OR\G\NAL ECONOMIC DEVELOPMENT AGENCY FROM: Emil A. Marzullo Interim Executive Director SUBJECT: Consent to the substitution of CAP VI Plaza, LLC, a California Limited Liability Company, as Co-General Partner replacing A.F. Evans Company, Inc., a California Corporation in the Agency Loan Agreement dated October 16, 2000, with AFE-Pioneer Associates, LP, a California Limited Partnership, Owner of the Pioneer Park Plaza - 555 North "G" Street, San Bernardino (Central City North Redevelopment Project Area) DATE: May 22, 2009 -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Synopsis of Previous Commission/Council/Committee Action(s): On May 21,2009, Redevelopment Committee Members Johnson, Baxter and Brinker unanimously voted to recommend that the Mayor and Common Council and/or the Community Development Commission consider this action for approval. -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Recommended Motion(s): (Communitv Development Commission) Resolution of the Community Development Commission approving and authorizing the Interim Executive Director of the Redevelopment Agency of the City of San Bernardino ("Agency") to execute the consent to the substitution of CAP VI Plaza, LLC, a California limited liability company, as Co-General Partner and Owner of the Pioneer Park Plaza Development located at 555 North "G" Street, San Bernardino (Central City North Redevelopment Project Area) -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Project Area(s): Musibau Arogundade Central City North Redevelopment Project Area Phone: (909) 663-1044 Contact Person(s): Ward(s): 151 Supporting Data Attached: [{1 Staff Report IiI Resolution(s) IiI Agreement(s)/Contract(s) IiI Map(s) 0 Letter(s) Budget Authority: N/A N/A Funding Requirements: Amount: $ -0- Source: Signature: -~---- Rus Dejesus " erim Administrative Services Director ---C-~-~~-i-~~i~n7C-~~n~iiN-~-t~~-:----d----d---d-------------1f35~,----d-l:z~1~~~T~-~--r~--------------------d--------____________________d________________ ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- P:\Agendas\Comm Dev Commission\CDC 2009\06-01-09 CAP VI PLAZA, LLC Loan Substitution (AF. Evans) SR.doc COMMISSION MEETING AGENDA Meeting Date: 06/01/2009 Agenda Item Number: P- '33 ECONOMIC DEVELOPMENT AGENCY STAFF REPORT ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- CONSENT TO THE SUBSTITUTION OF CAP VI PLAZA, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, AS CO-GENERAL PARTNER REPLACING A.F. EVANS COMPANY, INC., A CALIFORNIA CORPORATION IN THE AGENCY LOAN AGREEMENT DATED OCTOBER 16, 2000, WITH AFE-PIONEER ASSOCIATES, LP, A CALIFORNIA LIMITED PARTNERSHIP, OWNER OF THE PIONEER PARK PLAZA - 555 NORTH "G" STREET, SAN BERNARDINO (CENTRAL CITY NORTH REDEVELOPMENT PROJECT AREA) BACKGROUND: In July 1978, the Agency sold the land located at 555 North "G" Street in the City of San Bernardino ("City") (the "Project") to Pioneer Park Plaza, a California limited partnership ("Pioneer"), in order to construct a 161- unit senior complex pursuant to the provisions of the Disposition Agreement dated December 29, 1976. In 1979, the construction of the Project was completed with the assistance of a United States Department of Housing and Urban Development ("HUD") Section 8 Housing Assistance Grant ("HUD Grant"). The HUD Grant required that the Project units would remain affordable (50% of the Area Median Income) to elderly individuals for the duration of the Regulatory Agreement between the Owner and HUD (i.e., 20 years). On July 19, 2000, the Community Development Commission of the City of San Bernardino ("Commission") approved a $250,000 amortized rehabilitation loan at 3% with a 35-year term to rehabilitate the Project with an annual repayment amount of $11 ,546 to assist A.F. Evans Pioneer Associates, a California limited partnership (the "Owner"), after the acquisition of the Property from Pioneer. The Owner is current and in good standing on the loan payment. The Project consists of a 3.87-acre parcel, 160 one-bedroom units and 1 two-bedroom unit in 2 three-story buildings (unit sizes are between 535 to 660 square feet). Common amenities in the Project include a recreation room and 2 laundry areas. The Project has 51 covered and 15 uncovered parking spaces. All units in the Project are currently occupied. The average annual median income of the occupants is $14,000 per year, and the average household size is 1 person. All occupants pay not more than 30% of their annual gross income for housing expenses. The Project was acquired by AFE-Pioneer Associates through an investment of $6.4 million in a combination of tax exempt bonds, 4% tax credits and owners equity together with the HUD Grant. The Project is in good condition and is well maintained. CURRENT ISSUE: In a letter dated June 13, 2008, the Owner requested that the Agency approve the substitution of the general partnership wholly controlled interest with Carmel Partners, LLC, a Colorado limited liability company ("Carmel"). This request was presented to the Redevelopment Committee ("Committee") at the July 10, 2008 meeting, with the Committee recommending approval of the Consent to substitute Carmel as the general partner to the Community Development Commission of the City of San Bernardino ("Commission"). Prior to the Commission considering the request in 2008, Agency Staff was advised that A.F. Evans Company, Inc., a California corporation, the general partner, filed for bankruptcy with the Federal Court approving the bankruptcy case on February 2, 2009. The Court also approved the substitution of Reliant CAP VI, LLC, a California limited liability company, as a sole member and CAP VI-PLAZA, LLC, a California limited liability company, as Co-General Partner as opposed to Carmel. It is important to note that AFE-Pioneer ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- P:\Agendas\Comm Dcy Commission\CDC 2009\06-01-09 CAP VI PLAZA, LLC Loan Substitution (A.F. Evans) SR. doc COMMISSION MEETING AGENDA Meeting Date: 06/0112009 Agenda Item Number: ~~ 3 Economic Development Agency Staff Report A.F. Evans Loan Substitution of CAP VI Plaza, LLC Page 2 Associates, LP, Owner of the Pioneer Park Plaza apartments is not a party to the bankruptcy case and as a result, the Agency's loan was never in jeopardy. Reliant CAP VI, LLC and CAP VI-PLAZA, LLC, are both subsidiaries of the Reliant Group with headquarters in San Francisco. The Reliant Group has over $60.5 million in assets and over 7,000 plus units in its management portfolio in California, New Mexico, Texas, Arizona, Florida and Missouri. Agency Staff contacted the City's of Rohnert Park, Woodland, Fresno and Suisun City to verify that the projects of the Reliant Group in their jurisdictions are properly managed and crime free. Agency Staffs investigation was inconclusive because each City's representatives were unable to provide input with regards to how the property in their jurisdiction is being managed. AFE-Pioneer Associates, LP, remains the sole owner and operator of the Project in San Bernardino. The Management Agent, Evans Property Management, Inc., an affiliate of the Owner, will remain and continue to provide quality management on the Project. The loan agreement with the Owner stipulated that the Agency's prior approval must be sought before changing the Project Management Agent. To clarify a concern previously raised by the Redevelopment Committee, there will be a substitution of the Co-General Partner, however, Evans Property Management, Inc., will continue to manage the property. The approvals as contemplated will not involve any transfer of existing reserve funds or any other use or exchange of partnership funds. Agency Staff has been assured that the general partnership substitution will not affect the Agency's loan repayment as it does not involve any use or exchange of partnership funds and the Property Management Company will remain and continue to manage the property. The Agency will continue its preservation of 160 affordable senior housing units, meet the objectives and goals contained within the Central City North Redevelopment Project Area Plan, and preclude any potential blighting conditions from occurring on the site due to the age of the complex. Accordingly, Agency Staff recommends approval of the substitution of CAP VI- PLAZA, LLC, as Co-General Partner in place of A. F. Evans Company, Inc. The Owner sought and received partnership consent and approval from DB Mortgage Services, HUD and the California Tax Credit Allocation Committee. The Commission's consent is the last approval needed to complete the transaction. ENVIRONMENTAL IMPACT: The requested action is categorically exempt under the California Environmental Quality Act ("CEQA") Guidelines, Class 6, Section 15306 because the requested action will not result in the disturbance to any environmental resources. FISCAL IMPACT: The proposed action will not result in any fiscal impact to the Agency. RECOMMENDATION: That the Community Development Commission adopt the attached Resolution. .~ Emil A. Marzullo, Interim Executive Director ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- P:\Agendas\Comm Dev Commission\CDC 2009\06-01-09 CAP VI PLAZA, LLC Loan Substitution (A.F. Evans) SR.doc COMMISSION MEETING AGENDA Meeting Date: 06/01/2009 Agenda Item Number: 1...33 . . ~ w~, , AFE- Pioneer Associates, L.P 1 . '., or 1 RESOLUTION NO. r;=::> rR\ f[5) \.\,0~ RESOLUTION OF THE COMMUNITY DEVELOPMENT ~S~ i APPROVING AND AUTHORIZING THE INTERIM EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") TO EXECUTE THE CONSENT TO THE SUBSTITUTION OF CAP VI PLAZA, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, AS CO-GENERAL PARTNER AND OWNER OF THE PIONEER PARK PLAZA DEVELOPMENT LOCATED AT 555 NORTH "G" STREET, SAN BERNARDINO (CENTRAL CITY NORTH REDEVELOPMENT PROJECT AREA) 2 3 4 5 6 7 8 WHEREAS, on December 29, 1976, the Community Development Commission of the City of 9 San Bernardino ("Commission") approved the disposition of Agency property located at 555 North 10 "G" Street to Pioneer Park Plaza, a California limited partnership, for the development of a l6l-unit 11 senior housing complex; and 12 WHEREAS, in July of2000, Pioneer Park Plaza, LP, sold the l6l-unit senior housing complex 13 to A.F. Evans Development Company, Inc. ("A.F. Evans"), and its subsidiary AFE-Pioneer Associates, 14 a California limited partnership ("AFE"); and 15 WHEREAS, on July 19, 2000, the Commission approved a rehabilitation loan in the amount 0 16 $250,000 to AFE to rehabilitate the l6l-unit senior housing complex (the "Project") and AFE is 17 current on the loan repayment and is not in default under the terms of the Rehabilitation Loan 18 Agreement with the Redevelopment Agency of the City of San Bernardino ("Agency"); and 19 WHEREAS, AFE has requested the Agency's consent to substitute CAP VI Plaza, LLC, a 20 California limited liability company ("CAP VI Plaza") as Co-General Partner in place of A.F. Evans. 21 WHEREAS, AFE has assured the Agency that the substitution request will not affect the 22 Agency rehabilitation loan repayment; and 23 WHEREAS, AFE subsidiary, Evans Property Management, Inc., will continue to manage the 24 Project under the terms of the current Management Agreement and prior approval from the Agency 25 will be sought as required under the Agency's Loan Agreement before a new property management 26 company is retained; and 27 WHEREAS, CAP VI Plaza has in excess of $60.5 million in assets and equity sources and in 28 excess 7,000 units in its management portfolio; and 1 P:\Agcndas\Resolulions\Resolutions\2009\06-01-09 CAP VI PLAZA LLC Loan Substitution (AF. Evans) CDC Reso.doc 1 WHEREAS, the Project is consistent with the goals of the Central City North Redevelopment 2 Project Area and the City Housing Element; and 3 WHEREAS, the Project will result in the preservation of 161 affordable senior housing units, 4 exclusively reserved for households earning less than 50% of the median income for San Bernardino 5 County and further assist the Agency in accomplishing its housing goals pursuant to the Community 6 Redevelopment Law; and 7 WHEREAS, the substitution of CAP VI Plaza as Co-General Partner in place of A.F. Evans is 8 categorically exempt under the California Environmental Quality Act ("CEQA") Guidelines, Class 9 6, Section 15306 because the requested action will not result in the disturbance to any environmental 10 resources. 11 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE 12 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS 13 FOLLOWS: 14 15 Section 1. The above recitals are true and correct. Section 2. The Community Development Commission hereby approves and authorizes the 16 Interim Executive Director of the Redevelopment Agency of the City of San Bernardino ("Agency") to 17 execute the consent to the substitution of CAP VI Plaza as Co-General Partner under the 2000 18 Rehabilitation Loan Agreement and make non-substantive corrections, additions and clarification 19 provided said changes do not increase the monetary impact to the Agency and are consented to by the 20 Agency Counsel. 21 Section 3. The substitution of CAP VI Plaza as Co-General Partner is a categorically 22 exempt action under the CEQA Guidelines, Class 6, Section 15306 because the requested action will 23 not result in the disturbance to any environmental resources. 24 Section 4. This Resolution shall become effective immediately upon its adoption 25 / / / 26 / / / 27 / / / 28 / / / 2 P:\AgendasIResolutionslResolutions).2009\06-01-09 CAP VI PLAZA LLC Loan Substitution (AT Evans) CDC Reso.doc 1 2 3 4 5 6 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION APPROVING AND AUTHORIZING THE INTERIM EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") TO EXECUTE THE CONSENT TO THE SUBSTITUTION OF CAP VI PLAZA, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, AS CO-GENERAL PARTNER AND OWNER OF THE PIONEER PARK PLAZA DEVELOPMENT LOCATED AT 555 NORTH "G" STREET, SAN BERNARDINO (CENTRAL CITY NORTH REDEVELOPMENT PROJECT AREA) 7 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community 8 Development Commission of the City of San Bernardino at a meeting 9 thereof, held on the day of 10 Commission Members: Ayes 11 ESTRADA 12 BAXTER 13 BRINKER 14 SHORETT 15 KELLEY 16 JOHNSON 17 MC CAMMACK 18 19 ,2009, by the following vote to wit: Absent Abstain Nays Secretary 20 The foregoing Resolution is hereby approved this 21 22 23 24 day of ,2009. Patrick J. Morris, Chairperson Community Development Commission of the City of San Bernardino 25 Approved as to Form: ~: By: \ ~~ Ag~l 28 3 P\Agendas\Resolutions\Resolutions~09\06-01-09 CAP Vl PLAZA LLC Loan Substitution (AT Evans) CDC Reso doc REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO CONSENT TO THE SUBSTITUTION OF CAP VI PLAZA, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, AS CO-GENERAL PARTNER REPLACING A.F. EVANS COMPANY, INC., A CALIFORNIA CORPORATION IN THE AGENCY LOAN AGREEMENT DATED OCTOBER 16, 2000, WITH AFE-PIONEER ASSOCIATES, LP, A CALIFORNIA LIMITED PARTNERSHIP This Consent to the Substitution of CAP VI Plaza, LLC, a California limited liability company, as Co-General Partner replacing A.F. Evans Company, Inc, a California corporation, in the Agency Loan Agreement dated October 16, 2000, with AFE-Pioneer Associates, LP, a California limited partnership, dated as of June 1, 2009, is executed as of said date by the Redevelopment Agency of the City of San Bernardino (the "Agency"), a public body, corporate and politic. RECITALS WHEREAS, on December 29, 1976, the Community Development Commission of the City of San Bernardino (the "Commission") approved the disposition of real property located at 560 North "F" Street, San Bernardino, California (the "Property") by the Agency to Pioneer Park Plaza, a California limited partnership ("Pioneer Park Plaza"), for the development of a 161-unit senior housing complex located at 555 North "G" Street; and WHEREAS, on October 16, 2000, Pioneer Park Plaza, sold the Property to AFE-Pioneer Associates, LP, a California limited partnership (the "AFE-Pioneer"), and WHEREAS, on October 16,2000, the Agency made a Loan to the AFE-Pioneer in the principal amount of Two Hundred Fifty Thousand Dollars ($250,000) (the "Agency Loan") in accordance with and pursuant to that certain Loan Agreement, dated as of October 16, 2000 (the "Loan Agreement"), by and between the Agency and AFE-Pioneer to purchase and to rehabilitate the Property; and WHEREAS, the Agency Loan is evidenced by a promissory note (the "Note"), dated as of October 16, 2000, in the amount of Two Hundred Fifty Thousand Dollars ($250,000) and secured by a deed of trust, security agreement, assignment of rents and fixture filing, of even date therewith (the "Deed of Trust"), which Deed of Trust encumbers the Property (the Note, the Deed of Trust and all other instruments, agreements, documents, certifications and guaranties evidencing, securing, guaranteeing, relating to, or executed in connection with the Agency Loan shall collectively be referred to as the "Agency Loan Documents"); and 1 P:\A.gendas\Agenda Anachments\Agenda Attachments\Agenda Anachments\Agrmts-Amend 2009\06-01-09 CAP \-1 PLAZA. LLC Loan Substitution Agreement (AF. Evans),doc WHEREAS, the Agency Loan is subordinate to a loan (the "Senior Loan") made by Berkshire Mortgage Finance Bethesda limited partnership, a Massachusetts limited partnership (the "Senior Lender"), which Senior Loan is evidenced by one (1) or more promissory notes (the "Senior Note") in favor of the Senior Lender and secured by a deed of trust encumbering the Property (the "Senior Deed of Trust") (the Senior Note, the Senior Deed of Trust and all other instruments, documents, agreements, certifications and guarantees evidencing, securing, guaranteeing, relating to, or executed in connection with the Senior Loan shall collectively be referred to as the "Senior Loan Documents"); and WHEREAS, the AFE-Pioneer has notified the Agency of its desire to replace A. F. Evans Company, Inc., a California corporation ("Evans"), the current general, with CAP VI Plaza, LLC, a California limited liability company ("CAP VI"), as the new co-general partner, without the use or exchange of any funds of the AFE-Pioneer; and WHEREAS, the AFE-Pioneer is not in default under the Senior Loan or under the Agency Loan; and WHEREAS, CAP VI has over Sixty Million Dollars ($60,000,000) in equity funds and resources and manages over seven thousand (7,000) residential units; and WHEREAS, the substitution of CAP VI, as the new co-general partner, will not adversely affect the ability of the AFE-Pioneer to pay and perform all obligations under the Senior Loan and under the Agency Loan; and WHEREAS, the Property will continue to be managed by Evans Property Management, a California corporation (the "Property Manager"), a subsidiary of AFE-Pioneer, pursuant to the management contract, dated as of November 13,2000, by and between the AFE-Pioneer, and the Property Manager, as manager (the "Management Agreement"); and WHEREAS, the CAP VI, as co-general partner, will not refuse to extend the Management Contract without the prior written consent of the Agency; and WHEREAS, the Project (as defined in the Loan Agreement) is consistent with the goals of the Central City North Redevelopment Project Area and with the Redevelopment Plan; and WHEREAS, the Agency in reliance upon the truth and correctness of the above recitals is willing to consent to the substitution of CAP VI as the new co-general partner, pursuant to the attached form of Assignment, Assumption, Withdrawal and Amendment of Partnership Agreement and its Exhibits "A" and "B". //1 //1 //1 2 P:\Agendas\Agenda Attachments\Agenda Attachmenls\Agenda Attachments\Agrmts-Amcnd 2009\06-01-09 CAP VI PLAZA, LLC Loan Substitution Agreement (A.F. Evans).doc NOW THEREFORE IN CONSIDERATION OF THE RECITALS SET FORTH IN THIS CONSENT, THE AGENCY AGREES TO THE FOLLOWING: CONSENT 1. Recitals. The above recitals are true and correct and are hereby incorporated herein by this reference. 2. Definitions. Terms not otherwise defined in this Consent shall have the meaning provided for in the Loan Agreement. 3. Consent. The Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic, does hereby consent to the substitution of CAP VI, as the co-general partner, to replace A. F. Evans Company, Inc., as the co-general partner and as a party to the Agency Loan Agreement dated October 16,2000. 4. Manaeernent Contract. By the execution and delivery of this Consent, the CAP VI, as co-general partner, hereby agrees that it will not terminate the Management Contract or refuse to extend the term of the Management Contract with the Project Manager, from time-to-time, without the prior written consent of the Agency. AGENCY Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic Dated: By: Emil A. Marzullo, Interim Executive Director Approved as to Form and Legal Content: BY:~ e Counsel 3 P\Agendas\Agenda Anachments\Agenda Anachments\Agenda Attachments\Agrmts~Amend 2009\06-01-09 CAP \-1 PLAZA. LLC Loan Substitution Agreement (A.F Evans) doc THE CAP VI PLAZA, AS CO-GENERAL PARTNER, ACCEPT, UNDERSTAND AND ACKNOWLEDGE THE CONSENT: AFE-Pioneer Associates, LP, a California limited partnership By: CAP VI PLAZA, LLC, a California limited liability company, as general partner By: The Reliant Group, the managing member By: Name: Title: Date: 11/ 11/ 11/ 11/ 11/ /11 11/ 11/ 11/ 11/ 11/ 11/ /11 11/ /11 11/ 11/ /11 11/ 11/ 4 P:\Agendas\Agenda Anachmentsl.Agenda Attachments\Agenda Attachments\Agnnts-Amend 2009\06-01-09 CAP \1 PL.A..ZA, LLC Loan Substitution Agreement (AF Evans),doc ASSIGNMENT, ASSUMPTION, WITHDRAWAL AND AMENDMENT OF PARTNERSHIP AGREEMENT This ASSIGNMENT, ASSUMPTION, WITHDRAWAL AND AMENDMENT OF PARTNERSHIP AGREEMENT (the "Agreement") is made as of this day of ,2009 (the "Effective Date"), by and among A. F. Evans Company, Inc. ("AFECo"), A. F. Evans Development, Inc., Evans Property Management, Inc., Evans Senior Communities, Inc. and Arthur F. Evans (collectively, the "AFECo Affiliates"), and CAP VI - Plaza, LLC, a California limited liability company ("Reliant" or "Assignee"), and is consented to by the Consenting Partner(s) with reference to the following recitals of fact: RECIT ALS A. AFECo is the general partner of AFE-Pioneer Associates, L.P., a California limited partnership (the "Partnership"), which is governed by its First Amended and Restated Agreement of Limited Partnership, dated as of November 1,2000, (the "Partnership Agreement"). The AFECo Affiliates, collectively, constitute all of the affiliates of AFECo that have any right, title or interest in and to the General Partner Interest (the "GP Interest") relating to the Project or the Partnership. B. Pursuant to the terms of the Partnership Agreement, SLP, Inc., a Massachusetts corporation, and MMA Pioneer Park Plaza, LLC, a Delaware limited liability company formerly known as Lend Lease Pioneer Park Plaza, LLC, are the limited partners of the Partnership (collectively, the "Limited Partner"). The Limited Partner shall also be called the "Consenting Partner." C. This Agreement is made pursuant to that certain Purchase and Sale Agreement between AFECo and The Reliant Group, Inc., a California corporation (the "Reliant Group"), dated December 2, 2008, as amended by the Amendment to Purchase and Sale Agreement for General Partner Interests executed by and between the AFECo and CAP VI - Greenery, LLC, a California limited liability company, as further amended by the Second Amendment to Purchase and Sale Agreement For General Partner Interests, dated as of February 27,2009, by and between AFECo, CAP VI - Bigby, LLC, a California limited liability company, CAP VI - Charter Oaks, LLC, a California limited liability company, CAP VI - Greenery, LLC, a California limited liability company, CAP VI - Westgate, LLC, a California limited liability company, and CAP VI - Cascade, LLC, a California limited liability company, including all exhibits, riders, appendices, schedules and attachments thereto (collectively, the "Purchase Agreement") . D. Pursuant to the Purchase and Sale Agreement, the parties hereto desire to enter into this Agreement to effectuate the withdrawal of AFECo as a general partner of the Partnership, the assignment to Reliant of AFECo's entire GP Interest (as defined in the Purchase Agreement) in and to the Partnership and of its right, title and interest in the Partnership Agreement, , the assignment of each AFECo Affiliate's right, title or interest in and to the OP 4834-7019-5203.2 Interest in the Partnership and of all right, title and interest of the AFECo Affiliates in, to and under the Partnership Agreement, and the assumption by Reliant of the GP Interest of AFECo in the Partnership and the assumption by Reliant of all right, title and interest of AFECo in the Partnership Agreement, as of the Effective Date, all as more fully set forth hereinbelow. E. Upon execution, this Agreement constitutes an amendment to the Partnership Agreement to provide for the substitution of Reliant in place of AFECo as the general partner of the Partnership. F. Capitalized terms not defined herein shall have the meanings set forth in the Partnership Agreement, unless stated otherwise. NOW, THEREFORE, in consideration of the Project Purchase Price paid by Reliant Group to AFECo pursuant to the Purchase Agreement and the mutual covenants contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: AGREEMENT 1. Assignment and Assumption. AFECo hereby assigns all of its right, title and interest in and to the Partnership Agreement and its GP Interest in the Partnership to Reliant, and Reliant hereby assumes the Partnership Agreement and all of AFECo's right, title and interest in and to the GP Interest in the Partnership, all as of the Effective Date. Each AFECo Affiliate hereby assigns all of its right, title and interest in and to the GP Interest in the Partnership to Reliant, and Reliant hereby assumes all of the AFECo Affiliates' respective right, title and interest in and to the GP Interest in the Partnership, all as of the Effective Date. Reliant further agrees, that as of the Effective Date, it shall be bound by the terms of the Partnership Agreement, and the agreements listed on Schedule 1 to the Omnibus Assignment (the "Related Agreements"). 2. Withdrawal. AFECo hereby voluntarily withdraws from the Partnership as a general partner thereof and has executed and delivered the release in the form annexed hereto as Exhibit A, attached hereto and incorporated herein by this reference, all as of the Effective Date. AFECo has provided the release contained in Section 3.6 of the Purchase Agreement. AFECo and each AFECo Affiliate acknowledge that they have no further interest in the Partnership, the GP Interest or the Project as of the Effective Date, and AFECo shall be deemed to have voluntarily withdrawn as a general partner of the Partnership as of such date. AFECo acknowledges that it no longer has any interest in or rights or claims against the Partnership in its capacity as a withdrawn general partner, including any rights to receive unpaid or unreturned capital contributions or repayment of any loans to the Partnership, if any, or for unpaid fees or compensation (other than one (1) month of accrued property management, accounting, or bookkeeping fees due to Evans Property Management, Inc. as management agent and the continuing contract between Evans Property Management, Inc. and the Partnership) earned in its capacity as a general partner of the Partnership, or pursuant to the Related Agreements prior to the Effective Date. AFECo and each AFECo Affiliate acknowledge that they no longer have any interest in or rights or claims against the Partnership in its capacity as a lender, service provider or otherwise with respect to the Partnership, the Project, the Related Agreements, or the GP 4834-7019-5203.2 2 Interest, including any rights to receive repayment of any loans to the Partnership, if any, or for unpaid fees or compensation earned in its capacity as a lender, service provider or otherwise with respect to the Partnership, the Project, the Related Agreements or the OP Interest prior to the Effective Date. AFECo hereby acknowledges, agrees, confirms and reaffirms that it remains obligated and liable under the Partnership Agreement and the Related Agreements for (a) all obligations performed or which were to be first performed by AFECo prior to the Effective Date, and (b) all liabilities which are first discovered upon or following the Effective Date, which obligations are attributable to the action or inaction of AFECo in its capacity as a general partner of the Partnership prior to the Effective Date except to the extent that such liability was caused or increased by the negligence, breach of fiduciary duty or misconduct of Reliant or any Reliant Designated Affiliate (as defined in the Partnership Agreement) (collectively, "AFECo Obligations"). Assignee is not assuming and shall have no liability for the AFECo Obligations, but shall be liable for any and all obligations, warranties, representations, covenants and conditions to be first performed by it pursuant to the Partnership Agreement and the Related Agreements from and after the Effective Date and which do not otherwise constitute AFECo Obligations (collectively the "Assumed Obligations"). In connection with AFECo's withdrawal and assignment as set forth herein, AFECo and each AFECo Affiliate hereby covenant and agree to assign, to convey and to deliver to Reliant, on the Effective Date, all documents, files, reports, instruments, books and records, keys, personal property, bank accounts and other items of the Partnership (which shall remain the property of the Partnership) and AFECo and any AFECo Affiliate, which AFECo and its Affiliates have in their possession or control, or which they would have in their possession or control with the exercise of reasonable diligence. With respect to any such items which comes into the possession or control of AFECo or its AFECo Affiliates after the Effective Date, AFECo hereby agrees to deliver or cause to be delivered all such items within ten (10) calendar days after its receipt of same. In connection with the foregoing, AFECo, the AFECo Affiliates and Reliant have executed the Omnibus Assignment of even date herewith (a copy of which is attached hereto as Exhibit B). In addition to the foregoing, upon the Effective Date, AFECo hereby covenants and agrees that it shall, to the extent the same has not already been accomplished by receipt of any of the Required Consents (as defined in the Purchase Agreement), (a) send written notice, providing that it is no longer a general partner of the Partnership and that Reliant is the sole general partner ofthe Partnership, to all entities involved with the development, financing and operation of the Property, including without limitation, all Lenders, all service and material providers, all federal, state and local governmental agencies having jurisdiction over the Project, the Partnership or both, including all Tax Credit Agencies, and any entity which is a party to any of the Project Documents, and (b) send a copy of each such notice simultaneously to Reliant. 3. Amendment of Partnership Agreement. This Agreement constitutes an amendment to the Partnership Agreement such that Reliant is substituted in the place of AFECo as the general partner of the Partnership as of the Effective Date. 4. Representations and Warranties. AFECo and each AFECo Affiliate hereby represent and warrant as of the date hereof that (a) immediately prior to the assignment and assumption set forth herein, they are the true and lawful owner of all right, title and interest of AFECo and of each AFECo Affiliate in, to and under the Partnership Agreement and of the OP Interest in the 4834-7019-5203.2 3 Partnership or interest therein being assigned hereby, (b) they have not previously assigned, pledged, encumbered or otherwise transferred all or any portion of such GP Interest or interest therein, or any right, title or interest in the Partnership Agreement, which has not been terminated or cancelled, and (c) the Partnership Agreement, the GP Interest in the Partnership and any interest therein is not subject to any lien, judgment or claim, and no event has occurred which with giving of notice, the passage of time, or both would result in any lien, judgment or claim being filed or levied against the same. AFECo and each AFECo Affiliate hereby further represent and warrant to Reliant and to the Limited Partners that they have all necessary power and authority to enter into this Agreement and otherwise to perform their obligations hereunder, as applicable, and AFECo has all necessary power and authority to withdraw as a general partner of the Partnership. AFECo and each AFECo Affiliate acknowledge that the foregoing representations and warranties are a material inducement to Reliant to accept the assignment of the Partnership Agreement and the GP Interest in the Partnership and all interest therein pursuant to this Agreement, and to assume the Partnership Agreement and the GP Interest in the Partnership pursuant to this Agreement, and to the Consenting Partner to consent to the same, and that without such representations and warranties Reliant would not accept such assignment and assumption and the Consenting Partner would not consent to such assignment and assumption. The foregoing representations and warranties shall survive the Effective Date. 5. Further Assurances. AFECo, the AFECo Affiliates and Reliant shall execute and deliver such further instruments and do further acts and things as may be required, including, but not limited to, obtaining any Requisite Approvals, to carry out the intent and purposes of this Agreement to more fully reflect and further evidence the withdrawal of AFECo from the Partnership, the assignment to Reliant of the Partnership Agreement and of the GP Interest in the Partnership and any interest therein from AFECo and the AFECo Affiliates, the assumption by Reliant of the Partnership Agreement and of the GP Interest in the Partnership pursuant to this Agreement and the other transactions effected hereby. 6. Consent of Limited Partner and Consenting Partner. Pursuant to Section 7.1 of the Partnership Agreement, AFECo may not voluntarily withdraw as general partner of the Partnership or assign its GP Interest without the consent of the Limited Partner. As evidenced by its signed acknowledgement of this Agreement, the Limited Partner hereby consents to (a) the assignment and assumption of the Partnership Agreement and the GP Interest in the Partnership and all interests therein from AFECo and from the AFECo Affiliates to Reliant and (b) the withdrawal of AFECo as a general partner of the Partnership. In addition, the Limited Partner acknowledges and agrees that Reliant shall not be liable for the AFECo Obligations; provided, however, that any act or failure to act shall continue to be subject to the default and remedy provisions of the Partnership Agreement and the Related Agreements. 7. Section 754 Election. Reliant, as general partner of the Partnership, shall cause the Partnership to elect pursuant to Internal Revenue Code (the "Code") S 754 and Treasury Regulation S 1.754-1, to adjust the basis of the Partnership assets and properties, with respect to Reliant's interests therein only, as provided in Code SS 734 and 743. 8. Reaffirmation of Existing Guaranty. AFECo, in its capacity as Guarantor pursuant to that certain Guaranty Agreement dated as of November 1,2000 (the "Existing Guaranty"), hereby reaffirms and ratifies the terms of the Existing Guaranty and consents, in its capacity as 4834-7019-5203.2 4 Guarantor, to the execution of this Agreement and the implementation of the transactions contemplated thereby; provided however, that from and after the Effective Date, the "Obligations" contained in the Existing Guaranty shall be deemed to refer to the AFECo Obligations as defined herein. In addition, from and after the Effective Date, AFECo shall no longer be obligated to comply with the net worth covenant contained in the Existing Guaranty. 9. Amendment to Section 6.4K of the Partnership Agreement. From and after the Effective Date, Section 6.4K of the Partnership Agreement is hereby deleted and replaced in its entirety as follows: "K. (i) Subject to any consents required by the Lender or the any Agency, the General Partner shall have the option ("Call"), to be exercised by written notice to Investor Limited Partner given at any time between the first day after the last day of the Compliance Period and two years after the first day after the last day of the Compliance Period (the "Call Period"), to purchase the Investor Limited Partner's Interest in the Partnership for a price equal to greater of (a) the fair market value of the Investor Limited Partner's Interest in the Partnership or (b) the exit tax liability of the Investor Limited Partner. The fair market value of the Investor Limited Partner's Interests for this purpose shall be the amount the Investor Limited Partner would have received, pursuant to Section 10, from a hypothetical sale of the Property for its fair market value (taking into account a deemed brokerage commission in the amount of six percent (6%) and other typical sales costs and with value taking into account all restrictions on the use of the Property). If the General Partner and, Investor Limited Partner cannot agree on the fair market value within twenty (20) calendar days after the date of the Call, then the fair market value shall be determined by two (2) independent appraisers (both members ofthe Master Appraiser Institute and with experience with affordable housing properties), one (1) selected by the General Partner and one (1) selected by the Investor Limited Partner. If such appraisers are unable to agree on the value of the Investor Limited Partner's Interest, they shall jointly appoint a third independent appraiser whose determination shall be final and binding. The appraisers may act with or without a hearing, and the cost of the third party independent appraiser will be paid by the Partnership. The exit tax liability shall be the sum of all federal, state and local tax liability imposed on the Investor Limited Partner, including, without limitation, income taxes, from a hypothetical sale of the Property for an amount equal to the outstanding principal, accrued interest, any prepayment penalty and other sums due in connection with any mortgage debt relating to the Property or other indebtedness of the Partnership. (ii) Subject to any consents required by the Lender or any Agency, at any time from and after the expiration of the Call Period without exercise of the Call, the Investor Limited Partner shall have the option (the "Put") to require the General Partner to purchase all of the Investor Limited Partner's Interest for a price (the "Put Price") equal to the lesser of (a) the fair market value of the Investor Limited Partner's Interest in the Partnership or (b) the exit tax liability of the Investor Limited Partner. The Fair market value and the exit tax liability shall be determined by the process set forth in Section 6.4K(i) above. Notwithstanding the foregoing, the Put Price shall not, in any event, be less than $100.00. Such put right shall be exercisable by written notice from the Investor Limited Partner to the General Partner, and upon receipt of such notice, the General Partner shall have 180 calendar days to acquire the Investor Limited Partner Interest 4834-7019-5203.2 5 described in such notice. The failure of the General Partner to pay the Put Price and consummate the purchase within 180 calendar days shall entitle the Special Limited Partner and the Investor Limited Partner to the rights set forth in Section 6.4K(iii) below. (iii) If the General Partner has not exercised its rights under Section 6.4K(i) above and the Investor Limited Partner has exercised its rights under Section 6.4K(ii) above but the General Partner has failed to pay the Put Price and consummate the purchase, the Special Limited Partner and the Investor limited Partner shall have the right to market the Property for sale through a nationally recognized broker specializing in the sale of income-restricted Properties. Such effort to market the Property shall be under the full control of the Special Limited Partner and the Investor limited Partner and, further, the Investor Limited Partner and the General Partner shall cooperate in all respects necessary to effectuate a sale (such cooperation to include reasonable efforts to provide to the potential buyer customary information regarding the Property). Upon receipt of a final offer from an acceptable buyer that does not create or impose any personal liability on the General Partner or its Affiliates, the General Partner shall have a right of first refusal to purchase within six (6) months either (a) the Property on the same terms and at the same price, or (b) the Investor Limited Partner's Interest in the Partnership for a price equal to the amount the Investor limited Partner would have received, pursuant to Section 10, from a hypothetical sale ofthe Property at the price set forth in such final offer. (iv) Concurrent with any transfer of the Investor Limited Partner Interest in the Partnership pursuant to Sections 6.4K (i), (ii), or (iii) above, the General Partner shall acquire the Special Limited Partner's Interest in the Partnership for a price of$100.00." 1 o. Development Agreement and Partnership Agreement. Section 4.1 B of the Partnership Agreement is hereby amended by deleting the reference to "the tenth anniversary of the Completion Date" and inserting "January 2, 2016." 11. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. 12. Governing Law. This Agreement shall be governed by the laws of the State of California. SIGNATURES ON FOLLOWING PAGE 4834-7019-5203.2 6 IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the Effective Date (as set forth above). A.F. EVANS COMPANY, INC., a California corporation By: Name: Its: CAP VI - PLAZA, LLC, a California limited liability company By: Reliant CAP VI, LLC, a California limited liability company, its sole member and manager By: The Reliant Group, Inc., a California corporation, its manager By: Name: Its: A.F. EVANS DEVELOPMENT, INC., a California corporation By: Name: Its: EVANS PROPERTY MANAGEMENT, INC., a California corporation By: Name: Its: 4834-7019-5203.2 7 SIGNATURES CONTINUE ON NEXT PAGE EVANS SENIOR COMMUNITIES, INC., a California corporation By: Name: Its: Arthur F. Evans 4834-7019-5203.2 8 ACKNOWLEDGEMENT AND CONSENT OF LIMITED PARTNERS The undersigned, being the limited partners of AFE-Pioneer Associates, L.P., a California limited partnership, hereby acknowledge and consent to the foregoing Assignment, Assumption, Withdrawal and Amendment of Partnership Agreement dated as of this day of , 2009 (the "Assignment") and, subject to the terms of the Assignment, hereby ratify the Partnership Agreement (as defined in the Assignment). MMA PIONEER PARK PLAZA, LLC, a Delaware limited liability company By: West Cedar Managing, Inc., a Massachusetts corporation, its Manager By: Name: Title: SLP, INC., a Massachusetts corporation By: Name: Title: 4834-7019-5203.2 9 EXHIBIT A TO ASSIGNMENT AND ASSUMPTION AGREEMENT RELEASE BY GENERAL PARTNER This Release ("Release") is made as of ,2009, by A.F. Evans Company, Inc., a California corporation, the general partner of the Partnership (the "General Partner"). WHEREAS, pursuant to an Assignment, Assumption, Withdrawal and Amendment of Partnership Agreement (the "Agreement"), dated as of even date herewith, by and among the General Partner, certain of the General Partner's affiliates, and CAP VI - Plaza, LLC, a California limited liability company (the "Assignee"), the General Partner has transferred its general partner interest to the Assignee, among other things. Capitalized terms used herein but not otherwise defined shall have the meaning ascribed to such terms in the Agreement or the Purchase Agreement defined in the Agreement. NOW, THEREFORE, in consideration of the sale to the Assignee of the GP Interest in accordance with the terms and conditions of the Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the General Partner, for itself and its affiliates (including, without limitation, those affiliates of the General Partner that are parties to the Agreement) and all of their respective successors and assigns (collectively, the "Releasors"), hereby forever fully and irrevocably releases each of the Partnership, any past or present partners of the Partnership, Buyer and Assignee and all of their respective affiliates, predecessors, successors, assigns and past members, shareholders, directors, officers, employees, agents, and representatives of the foregoing (collectively, the "Released Parties") from any and all claims, demands, and causes of action of every kind and nature arising directly or indirectly from or as a result of the General Partner's participation in the Partnership and/or the Project prior to the date oftrus Release (including, without limitation, claims for damages, costs, expenses, and reasonable attorneys', brokers' and accountants' fees and expenses), whether known or unknown, suspected or unsuspected (collectively, the "Released Claims"); provided, however that this release shall be inapplicable to Released Claims arising out of (i) a breach of Buyer's representations, warranties, indemnities and other agreements set forth in the Agreement, the Purchase Agreement or any other of Buyer's Documents or (ii) Buyer's fraud or willful misconduct. The Releasors hereby irrevocably agree to refrain from directly or indirectly asserting any claim or demand or commencing (or causing to be commenced) any suit, action, or proceeding of any kind, in any court or before any tribunal, against any Released Party based upon any Released Claim, and hereby expressly waive the provisions of Section 1542 of the California Civil Code which provides: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM ORHER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." 4834-7019-5203.2 10 This Release may not be modified except by a written document signed by the Partnership, its partners and the General Partner. This Release will be governed by and construed in accordance with the laws of the State of California without regard to its conflict of laws principles. Each of the undersigned represent and warrant that it has the absolute right, power, authority and capacity to execute and deliver this Release, and that it has not assigned any Released Claim. Each of the undersigned has read and understands this Release, has had the opportunity to consult with an attorney prior to signing it, and voluntarily enters into it with full knowledge of its terms and conditions and that such terms and conditions are binding on the undersigned. If any suit or other proceeding is brought for the enforcement or interpretation of this Release, or because of any alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Release, the successful or prevailing party shall be entitled to recover from the other parties reasonable attorneys' fees and other costs incurred in that suit or proceeding (including, in the case of arbitration, arbitration fees and expenses), in addition to any other relief to which such party may be entitled. The "successful or prevailing party" shall be the party that most closely obtains the relief it sought in such suit or proceeding, or, if each party prevails on a portion of its claims, it shall be entitled to recover in proportion to the extent that each party is the prevailing party, as determined by the court (or, in the case of an arbitration, the arbitrators). REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS 4834-7019-5203.2 11 IN WITNESS WHEREOF, each of the undersigned has executed this Release as of the date first above \VTitten. A.F. EVANS COMPANY, INC., a California corporation By: Name: Its: 4834-7019-5203.2 12 EXHIBIT B TO ASSIGNMENT AND ASSUMPTION AGREEMENT OMNIBUS ASSIGNMENT In accordance with the terms and conditions of that certain Assignment, Assumption, Withdrawal and Amendment of Partnership Agreement dated ,2009 (the "Assignment"), for valuable consideration, the receipt and adequacy of which is hereby acknowledged, A. F. Evans Company, Inc. ("AFECo"), A. F. Evans Development, Inc., Evans Property Management, Inc., Evans Senior Communities, Inc. and Arthur F. Evans (collectively, "Assignors"), do hereby assign, pledge, transfer and set over unto CAP VI-Plaza, LLC, a California limited liability company (the "Assignee"), all of Assignors' respective right, title, interest, powers, privileges and other incidences of ownership in and to (in its capacity as a general partner) the contracts, agreements and instruments listed on Schedule 1 attached hereto ("Contracts") and, as applicable any and all keys, account books, signature cards, personal property, records, reports, contracts, files, entitlements, permits, and any and all other items of whatever kind or nature (collectively, the "AFECo Items") associated with (1) the Assignors' respective roles as general partner of AFE-Pioneer Associates, L.P., a California limited partnership (the "Partnership"), or otherwise with respect to the Partnership, prior to Assignor's withdrawal in accordance with the Assignment, and (2) the ownership, construction, development and operation of the Partnership's certain real property development commonly known as "The Plaza Aparatmentsx." Assignee does hereby accept such assignment and assume all of Assignors' respective obligations under the Contracts; provided, however, that Assignee is not assuming and has no liability for Assignors' obligations under the Contracts prior to the Effective Date (as defined in the Agreement). This Omnibus Assignment shall be binding upon and inure to the benefit of the heirs, legal representatives, assigns or successors in interest of Assignors arid Assignee, but in no event shall this Omnibus Assignment be deemed to divest the Partnership's rights or ownership in the Contracts or AFECo Items. REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS 4834-7019-5203.2 13 IN WITNESS WHEREOF, the Assignors and Assignee have executed this Omnibus Assignment as of this day of ,2009. 4834-7019-5203.2 ASSIGNORS: A.F. EVANS COMPANY, INC., a California corporation By: Name: Its: A.F. EVANS DEVELOPMENT, INC., a California corporation By: Name: Its: EVANS PROPERTY MANAGEMENT, INC., a California corporation By: Name: Its: EVANS SENIOR COMMUNITIES, INC., a California corporation By: Name: Its: Arthur F. Evans 14 SIGNATURE PAGE FOLLOWS ASSIGNEE: CAP VI - PLAZA, LLC, a California limited liability company By: Reliant CAP VI, LLC, a California limited liability company, its sole member and manager By: The Reliant Group, Inc., a California corporation, its manager By: Name: Its: 4834-7019-5203.2 15 Schedule 1 to Omnibus Assignment Asset Management Agreement Development Agreement, as amended Incentive Management Agreement # 5988495_ v3 4834-7019-5203.2 16